How can I limit my risk when I remodel or build an addition to my home?

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How can I limit my risk when I remodel or build an addition to my home?

You can limit your risk, especially on a large remodeling or home addition project in several ways.

You can purchase insurance on the project. This will probably be in the form of a surety bond. The bond will be purchased from an insurance company and it will ensure that the contractor completes the job as specified in the contract. If the contractor fails to complete the work, goes out of business or claims bankruptcy before the work is finished, the bond will provide the funds to hire another contractor to complete the work to the standards specified in the contract.

You can limit your risk on any remodeling project by having a good, strong, well-written contract. A good contract should be as important to the contractor as it is to you. You should pay attention to the binding arbitration clause or other statement about how disagreements will be resolved.

You should also pay close attention to the payment and work schedules as they are outlined in the contract. In general, you probably will want to ensure that you do not pay for any work until it is completed and it passes all necessary inspections.

As the project draws to an end, you will want to closely monitor any liens placed on your property by the General Contractor or by any sub-contractors. As full payment is made for work completed, all liens should be removed in a timely fashion. If they are not removed, you should continue to monitor and insist upon their immediate removal. These liens could result in legal action for additional money from you. They could also delay or prohibit sale of your property at some future date.

The best way to limit your risk when you remodel or build an addition to your home is to engage an attorney who will help you review contracts, change orders, disagreements, liens and payments to contractors.